Why should any business owner like social media? Because social media connects people – employees to other employees, employees to customers, business and IT decision makers and vice versa, customers to customers, and so on.

Let’s forget the public giants, Facebook and Twitter, for a moment and focus on the social media technologies that connect employees of large companies to each other, inside the company. In this scenario, social paradise is when your social technologies (think company blog and micro-blog), are adopted by your employees and help form social capital among 10s or 100s of thousands of them on a global scale, like at my company, Dell.

Why should you care? Social capital (really not an oxymoron!) is a critical fuel for corporate knowledge sharing, innovation and growth. What company does not want that?

Let’s dig in a bit.

Social capital is best explained as:

The benefits an individual (and by extension the company) derives from the network connections to others who might have what you need – mostly knowledge or information.

When you have a problem to solve or you begin a new project, what’s your first step? Consult the corporate knowledge base? Not so much. Ask a colleague who you know has knowledge and experience? Much more likely! That benefit of getting the answer from someone in your network is called social capital.

Social capital is not owned by any one individual, it cannot be taken away; it is inherent in the network connections among individuals. The bigger your network, the better your access to social capital. In a large company, the only feasible way to be part of a global network is via social communication technologies.

The value of internal social media use

Beginning in 2008 (yes, the very early days of anything related to social media for business) I conducted several long term studies at Dell that examined corporate blog and micro-blog use, specifically the impact and value of these social communication platforms on organizational social capital and knowledge sharing.

This was an important study because the impact of social technologies on organizational social capital has received limited attention, possibly because of the less than evident connection to measurable economic value (think ROI) and the newness of the tools for corporate use at the time.

This is definitely changing now. Social ROI has become a hot buzz word in the industry and corporations are finally figuring out how to apply social analytics and really derive actionable insights from social media conversations.

But, most of those studies have focused on external conversations. While internal communication has received much more attention over the past years, a true measure for social ROI on the inside has yet to emerge.

And there really is something to be had: Findings of my long term studies indicate that the corporate blog and micro-blog (examples are Yammer and SFDC’s Chatter) can lead to:

a shared understanding of organizational roles,

increased sense of group cohesiveness,

improved work processes,

higher efficiency and productivity

fostering of professional and personal ties between employees

… all leading to a company’s increased ability to innovate because of increased organizational social capital.

We need to embrace this opportunity

Of course it all starts with us, the leaders in large organizations. WE make “social” happen, WE share knowledge, WE innovate, WE build social networks and there’s a scorecard in there somewhere! But, to do all of that, we need support in the form of technology, training, and trust from our company.

My focus is on raising awareness of the often untapped potential of enabling employees with social media technologies. Building internal social networks and communities lead to social capital and exciting business benefits.

If you’re interested in learning more about the value of building internal social capital, here are some additional resources:

Dr. Konstanze Alex-Brown (@Konstanze, LinkedIn) leads Global Communications Social Media strategy at Dell. Prior to that, Konnie spent six years in executive, technology and innovation communications at Dell. She has co-authored several peer reviewed articles on the value of internal social media from a social capital perspective and has presented at various academic and industry conferences. Her research focus is on corporate communication using social media technologies and organizational social capital. To read more of Konstanze’s work, check out her personal blog.

Social scoring and ROI are two hot topics for marketers, and right now they’re largely separate considerations. But what if you could know which people were truly influential in terms of driving revenue for your brand?

Instead of guessing based on follower counts or shares, what if you could dig deep into customer data and predict which customers would drive more spending through social media? Marketers have been wondering about this for years. In his 2012 book Return on Influence, Mark Schaefer predicted that companies would seek to assign dollar values to influencers.

Even then, Schaefer saw influence as having a direct and measurable impact on the bottom line. “As companies begin to connect the dots between online influence and offline activities, real dollar values can be placed on customers and the demonstrated impact of their influence.”

The Crowded Landscape

The options abound for enterprises interested in a predictive analytics tool: with so many vendors in the space, it’s easy to find comprehensive articles like this one that compare the features and limitations of each possibility.

Major players like IBM, Dell and Oracle are facing increased competition from start-ups claiming to have cracked the code for measuring and predicting social influence on revenue.

Newcomer Ninja Metrics, for instance, superimposes purchase data over a customer’s social graph. Their algorithm purportedly enables companies to see who influences whom, and specifically how much money people spend as a result of their influential friends’ purchases.

Blue Yonder, another contender, has a team of scientists powering its software, which pairs predictive analytics with automation to create “automated, high-performance forecasts for buying behavior.” If that sounds like a risky proposition, that’s because it is. Given the wildly variable nature of consumer psychology and behavior, any solution offering full automation must be carefully scrutinized.

Although automation in this area may be fraught with risk, predictive modeling does provide some potentially powerful data. Armed with accurate predictions of consumer behavior, companies could drive customer acquisition and retention, increase consumer spending, and reduce churn. But any tool is of questionable benefit unless its predictions can be tested against actual results.

How does it work?

By examining spending correlations between users, predictive analytics software determines who drives others to make purchases. Depending on the tool, companies can parse the data extremely fine to figure out exactly how much revenue users bring in because of their social interactions.

Using analytics, it may be possible to adjust the lifetime value of existing customers upward (or downward) based on the amount of money they bring in above and beyond their own spending.

But according to Dmitri Williams, CEO of Ninja Metrics, the classic big spenders (or “whales”) aren’t necessarily the same people who drive social spending.

“Classic whales may spend for enjoyment or conspicuous consumption,” explains Williams. “That’s different from people who are extremely tied in with their friends, and spend money to enjoy their company. “

With “social whales,” spending is about the relationship. “They don’t necessarily wind up spending a lot for that,” says Williams, “but they cause a lot of people to join them and share in the experience with them: there’s a very different sociology to the spending pattern.”

Is this really new?

Start-ups often tout their analytics and modeling tools as revolutionary, but predictive modeling has been around for 15 years or more, according to Burke Powers, a senior managing consultant and practice lead for the IBM Business Analytics Solution Services team.

“It’s the same idea as when ice cream parlors used to give coupons to cheerleaders,” says Powers. “The cheerleaders had the social influence to bring their friends in, turn the parlor into a cool place, and drive business. Predictive modeling uses the same process, only now it’s online.”

Businesses have long tried to use social influence to drive sales, and they’ve never had more data at their disposal. “The impact of social influence on selling has been widely studied,” says Powers. “Marketers can compile full psychological profiles, do product profiling, create complex, actionable clusters of data—all this data can be added to the social graph and used to predict customer behavior, so the technology is there.”

Social Scoring vs. Quantifiable Influence

In order to drive actual revenue, predictive modeling and influence measurement would need to go well beyond social scoring services like Klout, Kred and PeerIndex.

“[These services] assume influence,’” Williams observes, “based on who’s being retweeted the most. But that’s not anything you can really prove. As a scientist, you can’t publish that.”

The key, according to Williams, is to think about the friendships themselves, rather than the relationship between the brand and the customer. “People enjoy products and services together,” he explains, “so what’s really important is their relationship: if you can reinforce that, you can sell more.”

The question, as Powers sees it, is less about identifying “social whales,” and more about determining what kind of influence these people have. Can they influence others to come to a business (and stay)? Use a product or game? Influence them to buy? And how can companies channel influence into sales? Without the ability to act on this insight, companies are unlikely to see the value, according to Powers.

Can you measure influence?

Theoretically, predictive analytics could revolutionize marketing.

Marketers could target “social whales” based on quantifiable, provable influence, identify which key users are at risk to stop using the product or service, and test the impact of win-back messaging, marketing campaigns, coupons and other tactics all the way through to the individual spend.

So why don’t more companies use predictive modeling? Because it has the potential to be creepy if used without thinking about how customers will react, explains Powers.

“The technology exists, but many companies are still coming to terms with the complexity and working out how to implement in a customer-friendly way,” he says.

Essentially, with enough data, it’s possible to predict influence, but you might creep out the influencers or those being influenced. Powers’s prediction: “There are going to be a lot of mistakes made before best practices are well understood.”

The mystery of “which 50% of your marketing works” could finally be solved, but can businesses effectively use this knowledge without being ham-fisted about it?

What do you think? Can you measure influence to such a granular degree, and is it worth the cost of collecting the data you’d need to power this type of algorithm?

You are not going to want to miss this insightful discussion on the new Marketing Companion podcast about Tom’s new book. You also do not want to miss our discussion of the world’s worst mobile apps, which caused us to crack up so much we could not even speak!

But we do eventually get to the meaty stuff like …

The difference between mobile technology and mobility

Creating an app today is more about sociology and psychology than IT

How to adjust organizationally to the commerce revolution?

Why you should not be wedded to technology

What does a mobile commerce team look like today?

Why many large companies are failing at mobile commerce

The importance of removing institutional barriers to create meaningful apps

How would a small business start creating a meaningful mobile app?

Personalization versus privacy

A mobile strategy based on poop. Yes. It’s true.

Yes, we cover a lot of ground in just 30 minutes.

What’s that you say? You can’t wait a moment longer? Well let’s get to it!

Our podcast is also brought to you by Voices Heard Media. Please check out this tremendous resource for scaling social media engagement. Take a look at building an engaged and relevant audience through innovative new game and polling platforms.

It’s always interesting to see the parade of buzzwords march through the old blog reader. Just reading headlines day by day is a pretty good way to watch the waves of social media buzz crash on the shore!

Here are three “trends” that I believe are severely over-hyped. I am NOT saying they are without value. I am saying that a lot of the buzz is being generated by over-simplified guru-speak that is out of step with business reality.

1. The social enterprise

Let’s say you walk into France one day and announce that they need to be more like Russia. No more wine and cheese. From now on, it’s vodka and caviar.

That change is not going to take place, at least not for a long, long time. I submit to you that it is no less difficult changing the culture of a large, established company than changing the culture of a large, established country. And for most companies, becoming a “social enterprise” will take a significant cultural change.

The curse of Zappos

The biggest mistake the field of social media marketing ever made was elevating Zappos to a god-like state of social enterprise nirvana. To be like Zappos … well … you need to BE Zappos! Not many companies have that kind of company culture or leadership, do they?

On paper, the idea of integrating social business into every aspect of the enterprise is intoxicating, especially for people chasing consulting dollars. But it is probably the hardest thing a company can do and at the end of the day, this is not a marketing issue, it is an HR/change management issue.

I had the pleasure of working with an amazing team at one of America’s biggest companies trying to move to “social enterprise.” These folks followed a model path to cultural change. They invested in training. They incorporated rewards for individuals and departments leading the change. They had metrics in place aligning their work to corporate objectives.

Crash and burn

In a sudden corporate realignment, the team leading the change effort started reporting to a new VP, a long-time employee steeped in the traditional company culture. In less than a month, the social enterprise effort was disbanded. Two years of investment … dead. Back to business as usual.

It didn’t matter if it was the right thing to do. It didn’t matter if it was making progress. The company culture usually overwhelms good intentions in the end. To truly make the change, the effort has to be actively sponsored by the CEO and I have seen cases where even that is not a guarantee of success.

“Social business” sounds good in theory but it is very difficult to achieve in practice.

2. The social employee

Another attractive idea is unleashing the power of employees to serve as social media advocates of your brand. Again, not a concept without merit, but a “trend” that is over-hyped as low-hanging fruit within reach of any organization.

One of the iconic beacons for employee social engagement is the company Whole Foods. I recently attended a talk featuring one of their business leaders who illustrated the practical limitations of socially activating their work force:

1) The majority of their employees are young, minimum-wage workers who may only be in the job a year or less. Is the high cost of training and monitoring these employees worth the potential risk to the brand?

2) Even skilled employees were found to be abusing the system. They might be posting company content on a social channel but then staying on the channel during business hours to chat with friends and family. The challenge of preventing abuse was overwhelming and expensive, the executive said.

There is probably no company with a more social-friendly culture than Whole Foods. But even in this case there are practical limits to what might make good business sense.

Activating employees is far more complex than training or “trusting” them to do the right thing.

3. Social selling

I was recently brought in to help support a “social selling” strategy for a Fortune 100 brand. They had already spent thousands of dollars of social selling training but saw no results and little adoption over a year. In fact, their sales were declining.

I dug into the data and conducted employee interviews to identify the problem.

Sales professionals told me they never bought into the program, citing the fact that their customers were passive social media consumers, if they were on there at all.

Turns out they were right. Research showed their competitors were dramatically increasing their spending on personal selling and it was working. What was going on here?

The surgeons strongly bought based on face-to-face relationships. The data confirmed this, the employees confirmed this, the competitors were capitalizing on that, but the division was too eager to drink the social selling Kool-aid and wasted a lot of time and money.

Like any change in strategy, start with the data, not a tactic.

Now in case you’re skimming this article, I want to emphasize again that there is vast potential in all of these ideas. But these atre usually risky, complicated change efforts and that reality is grossly under-represented by the fluffiness on the blogosphere right now.

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